School-Minded Protest of NY Tax Cap Falls Apart

     ALBANY, N.Y. (CN) – New York need not face claims that its property tax cap on school districts hampers children’s education, a judge ruled.
     The plaintiffs – led by Richard Iannuzzi, as president of New York State United Teachers (NYSUT) – can, however, amend their complaint to challenge a new “tax-freeze” credit that they say is “intertwined” with the tax cap.
     New York State United Teachers said it “very likely … will continue its challenge to the constitutionality of the tax cap, the effect of which is worsened by the recently enacted tax freeze.”
     “NYSUT believes strongly that the tax cap undemocratically deprives taxpayers of their constitutional right to determine local school funding levels, while exacerbating existing funding inequities that harm the state’s neediest and most vulnerable students,” the group added in a statement.
     The tax cap, passed in 2011 to counter New York’s reputation as a high-tax state, limits increases in school and local property taxes to 2 percent a year or to the rate of inflation, whichever is less.
     The tax freeze, added this year, provides a credit to certain qualifying taxpayers when school districts and local governments adopt budgets that do not exceed the cap. State officials said the new law will encourage long-term tax relief through sharing, consolidating or merging municipal services.
     Albany-based NYSUT, a federation of local unions representing current and retired public school teachers in the state, challenged the tax cap in early 2013 on a number of constitutional grounds and sought an injunction.
     Eight individuals, some on behalf of their school-age children, also joined as plaintiffs.
     Albany County Supreme Court Justice Patrick McGrath refused to toss the complaint for lack of standing, but did remove the governor, the state education commissioner and the state comptroller as defendants, saying they had no personal involvement as individuals. That left New York State as the sole defendant.
     In dismissing NYSUT’s constitutional claims on Sept. 23, McGrath cited a number of rulings by the state’s highest court, the Court of Appeals.
     NYSUT’s contention that the tax cap hit poorer districts harder, for example, echoes the high court’s 1982 rejection of claims that disparities in district wealth affected the quality of students’ education, according to the ruling.
     That 1982 decision, Levittown v. Nyquist, says the state constitution guarantees students the right to a sound, basic education, but does not require equal funding.
     Here NYSUT says the state “has created a statute which makes it harder for a district to raise funds above a certain threshold,” McGrath wrote.
     “Since the decision to raise funds lies with the voters, the state itself is not withholding any resources that deprive students of a sound, basic education,” he added. “A complaint so framed cannot withstand a motion to dismiss.”
     McGrath also disagreed with the contention that the tax cap keeps a district from exerting local control.
     “As pointed out by the defendants, a budget turned down by district voters is still an exercise of local control,” McGrath wrote. “‘Local control’ encompasses both favorable and unfavorable consideration of a school district’s budget, while plaintiffs appear to equate local control with budget approval. The vote itself connotes local control.”
     There is also no basis to claim that the tax cap’s supermajority provision improperly classifies and treats voters differently, according to the ruling.
     For school districts, approval to exceed the tax cap requires that 60 percent of voters agree; for a municipality, a supermajority is equivalent to a majority vote of the governing body, such as a town board.
     Equal-protection violations occur when people are treated selectively based on race, religion, gender or other considerations, McGrath noted.
     “Even if the court could find that the town boards and those that vote on school district budgets were ‘similarly situated’ in that they both can be categorized as involving budget approval, the court cannot conclude that they are being treated differently under the statute. Rather, the tax cap’s supermajority requirement applies to both,” the 16-page ruling states.
     McGrath also pointed out that he is the fourth judge assigned to the case since it was filed in February 2013, “and little has been accomplished by way of judicial decree.” Two other judges recused themselves and a third was named to a state midlevel appeals court earlier this year.
     So while NYSUT wanted a ruling first on its motion to amend the complaint to add the challenge to the new tax freeze, McGrath said that “as the tax cap and tax freeze are interrelated, the instant decision could inform how the parties seek to proceed, as it will constitute the law of the case.”
     He agreed, though, with NYSUT’s contention that amending the complaint was preferable to starting anew. That “would waste time and resources,” McGrath said.
     NYSUT asked to add the tax-freeze challenge in June.

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